Interest Only Mortgage

How Low Can You Go

The Interest Only (IO) mortgage will give you bar none the lowest monthly payment available. The (IO) payment is the lowest because it allows you the flexibility of only paying the interest portion of your payment (you waive the principal portion of your payment) for a defined period. The fixed interest only period is generally between 5-10 years.

The (IO) loan is a phenomenal cash management tool. Many individuals utilize the (IO) loan for a host of different reasons. Here are some common situations in which the (IO) is utilized:

• Borrower(s) that know they will not be in a home for a long period, and are more concerned with a low monthly payment than they are with building equity in the property.
• Borrower(s) that have purchased the home with the intent to remodel, and sell, the home within a short time period.
• Borrower(s) that would like to utilize the lowest possible payment in order to free up funds for other investments.
• Borrower(s) looking to make retirement changes (potential moves) and want to limit the amount of income being tied up in the property.
• Borrower(s) that are confident that their income will continue to increase, but would like more purchasing power based on a low (IO) payment. The idea here is that with an (IO) payment you’ll be able to budget for more home with a greatly reduced payment.

The Simple Truth

There are many other reasons to utilize an (IO) Mortgage. However, like any mortgage program it isn’t a one size fits all proposition. You’ll need to examine the program against your own personal goals to determine what is right for you.

If paying your home off is your number one goal, than this loan is obviously a bad choice as you’ll be making zero payment towards reducing the balance.

If you know you’ll be moving up, or moving out, in the near future than limiting the amount you spend with an (IO) loan may be a great idea.

Don’t worry…..if you need more help we are always available. We’ll help you examine your goals to determine what Loan Simple option will most effectively accomplish them.